It is not prescribed in sharee‘ah for people to gather with the family of the deceased to offer condolences. At the very least this kind of gathering is makrooh, whether they gather in the house of the family of the deceased or in these tents that they set up, or in a venue for special occasions which is set aside for this purpose, and so on, because that is an innovation that was not done by the earlier generations. Ibn Maajah narrated that Jareer ibn ‘Abd-Allah al-Bajali (may Allah be pleased with him) said: We used to think that gathering with the family of the deceased and making food was a kind of wailing (for the deceased).” Classed as saheeh by al-Albaani in Saheeh Ibn Maajah.
If they add to that bringing a reciter to read the Qur’aan, it is even more prohibited.
The scholars of the Standing Committee for Issuing Fatwas said:
What some people do of setting up large tents and bringing reciters to read Qur’aan, whether that is in return for payment or not, and offering food on the forty-day anniversary of the death -- all of these are things for which we know of no basis in sharee‘ah; rather they are innovations that have been introduced into the religion. And the Prophet (blessings and peace of Allah be upon him) said: “Whoever introduces into this matter of ours anything that is not part of it will have it rejected.” End quote.
Fataawa al-Lajnah al-Daa’imah, 9/136.
It also says (9/73):
Gathering when forty days have passed since the death of the deceased is an innovation (bid‘ah), and reading Qur’aan or what is called a khatmah for the deceased is a further innovation. It is haraam for the reciters to eat the food that is offered to them or to take any fee for their reading. Shaykh al-Islam Ibn Taymiyah narrated that there was consensus among the scholars that taking a fee for merely reading Qur’aan is haraam according to all the scholars, and there was no difference of opinion among them concerning that. End quote.
It also says (8/352):
Spending on food that is made for those who come to offer condolences and spending on setting up tents and the like is not permissible, whether it is paid for from the wealth of the deceased or from the wealth of anyone else. End quote.
So it is not permissible to do any of these things or to help in them, because it is a kind of cooperating in sin and transgression, and Allah says (interpretation of the meaning):
“Help you one another in Al‑Birr and At‑Taqwa (virtue, righteousness and piety); but do not help one another in sin and transgression. And fear Allaah. Verily, Allaah is Severe in punishment”
Their imposing a certain amount of money to be paid by every individual in order to set up this venue is something that is not permissible according to sharee‘ah. It is an objectionable action that should be opposed and it is not permissible to help them in that.
For more information please see the answer to question no. 14396
And Allah knows best.